Friday, March 30, 2012

Below are a series of political cartoons collected by the Special Inspector General for Iraq Reconstruction (SIGIR) from leading dailies within Iraq on corruption. In 2011, Iraq was tied for the 8th most corrupt country in the world by Germany's Transparency International. That was an improvement from the previous year when it was #4. A World Bank assessment of corruption gave Iraq a 5 out of 100 for 2010, with 100 being the best rank and 0 being the worst. The government has been completely incapable of stopping the widespread graft and bribery, because all the leading politicians and parties benefit from it. That led the chief anit-corruption official Judge Rahim al-Ogaili to resign in the middle of last year. The main anti-graft agency the Integrity Commission also told the SIGIR at the end of 2011 that the country's justice system is not able to deal with the problem. As a result, corruption is a constant issue in the Iraqi press as seen in these cartoons.

Corruption wave in "Tsunami Baghdad" (Al-Mada)

The caption reads, "I swear to God, if I weren't so protective of Iraq's money, I wouldn't have deposited it in my personal bank account!" (Al-Sabah Al-Jadeed)

It says Integrity Commission on the side of the mouse trap (Al-Mada)

Cartoon shows politicians interfering in the work of the Integrity Commission as they try to combat corruption (Al-Mada)

SOURCE

Special Inspector General for Iraq Reconstruction, "Quarterly Report and Semiannual Report to the United States Congress," 1/30/12

Thursday, March 29, 2012

March 20, 2012, was the deadliest day in Iraq so far for the month. At least fifteen bombs went off in ten different cities across the country. That included the capital, Kirkuk in Tamim province, Baiji and Samarra in Salahaddin, Baquba, the capital of Diyala, Mosul in Ninewa, Fallujah and Ramadi in Anbar, Karbala, and Hillah in Babil governorate, resulting in at least 50 deaths, and dozens more wounded. In Baghdad, a car bomb detonated outside of the Foreign Ministry. Another bomb went off by a Christian church in the Mansour district, there was an explosion in central Baghdad, and an attempt on the life of the head of the provincial council by a suicide bomber. Al Qaeda in Iraq’s umbrella organization, the Islamic State of Iraq, later took responsibility for the attacks, saying they wanted to disrupt the upcoming Arab League Summit happening in Baghdad. Every month or so, militants are able to carry off operations like these, which are aimed at undermining the government, and gaining press coverage to make it seem like Iraq is an unstable country. One of the reasons why terrorists are able to successfully detonate so many devices, and get them through the numerous checkpoints in places like Baghdad, is the security forces reliance upon fake bomb detectors.

In 2007, the Iraqi Interior Ministry began buying ADE-651 bomb detectors from the British company ATSC. The devices seemed too good to be true. The English firm claimed that they could detect guns, ammunition, drugs, truffles, human bodies, and ivory, and did not need batteries. Instead, the users were supposed to build up static electricity through walking. The Americans immediately warned the Iraqis that the purchase was a huge waste of money, but the Iraqis went ahead anyway. In 2009, the British government began investigating the company, and in 2010 the owner was arrested for fraud, and the devices were banned from further sales. The inspector general (IG) for the Interior Ministry began looking into the matter, and in October 2010 said that the ADE-651s did not work. They could not do anything however, because the Interior Minister Jawad Bolani used Article 136(b) of the constitution to stop any further investigation. In March 2011, Interior’s IG revealed that up to 75% of the $122 million spent on the bomb detectors actually went to kickbacks for Iraqi officials. That led to the arrest of the head of the Ministry’s bomb division. This was only possible because Minister Bolani was no longer in office after the March 2010 parliamentary elections. Despite all this, ADE-651s can still be seen across checkpoints throughout Baghdad. Below are pictures by Al-Khafaji Mohammed of the Iraqi photo blog BAGHDAD, showing the detectors being used in various security spots in the capital. This is just one example of the institutional corruption prevalent throughout Iraq. This is an especially troubling one however, because hundreds of citizens have probably died due to the use of these fake devices. It’s no wonder then that insurgents are still able to set off bombs in Iraq.

Wednesday, March 28, 2012

At the end of 2011, the Iraqi government began arresting and dismissing people they claimed were Baathists, setting off a political storm. It started when over a hundred staff and faculty from the University of Tikrit in Salahaddin were fired for alleged Baathist ties, followed by over 600 former regime members being detained. This crackdown led to a political crisis with the Prime Minister on the one hand, and the Iraqi National Movement (INM) and a few provinces on the other, which the country is still muddling through to this day. Maliki has since begun to release some of these prisoners to key political leaders to reward them for being willing to cooperate with him. Rather than being a sectarian conflict between the Shiite prime minister and a Sunni political party and provinces, this controversy really started as an internal rivalry within Maliki’s State of Law party that drew in the entire country.

Higher Education Minister Adeeb, not Premier Maliki was the one that started the anti-Baathist campaign in late 2011, which would throw the entire country into a political crisis (Daawa Thi Qar)

The crackdown on alleged Baathists actually began with the Higher Education Minister, rather than Prime Minister Nouri al-Maliki. In July 2011, reports emerged that Higher Education Minister Ali al-Adeeb, who is part of the premier’s State of Law party, was planning on firing former members of the old regime. In October, he started by claiming that his predecessor, Abdul Dhiyab al-Ugayli of the Iraqi Islamic Party, was a Baathist and that his administration had to be reversed. Adeeb then dismissed 140 members of the Tikrit University in Salahaddin, quoting the Accountability and Justice Law, which replaced the deBaathification law, as his justification. The Minister claimed that all those that were fired were former Baathists, and some were from Saddam Hussein’s intelligence agencies. That set off a storm, because the work of the Accountability and Justice Commission was suspended as part of the power sharing agreement that put together the new government in December 2010. The event also helped push Salahaddin towards wanting to become an autonomous region. Rather than being the first strike by the Prime Minister against his Sunni rivals, as many portrayed the event, it appeared that Adeeb was acting on his own. In fact, the Higher Education Minister is known as a rival with Maliki within the State of Law list. There have been several occasions for instance, where his name has been brought up as a possible replacement for Maliki. The differences between the two were highlighted when a member of State of Law accused Adeeb of lying when he said he was enforcing the Accountability Commission’s decisions.

Some of the alleged Baathists rounded up by Maliki in response to Adeeb's actions, while they confessed to various crimes on state run television, Nov. 2011 (Radio Free Iraq)

Not to be outdone by Adeeb, Maliki quickly went into action by arresting hundreds of alleged Baathists across the country. A total of 655 people were detained. The press reported that Libyan rebels passed onto the Iraqi government that Muammar Qaddafi was backing a Baathist coup, and that was the cause of the arrests. By mid-November 2011, the government trotted out some of the prisoners who confessed on television to committing various acts of terrorism. The authorities would claim they were behind up to 3,300 deaths over the last several years. Legal problems with the crackdown were immediately apparent by the shifting rational given for it. First, the government claimed that people were being picked up for promoting the Baath Party, which is outlawed. Then they talked about the rank of each person, probably because the Accountability and Justice Law bans certain levels of Baathists. The problem is the legislation does not say that is a legal basis for arrest, just the denial of government jobs. The temporary head of the Accountability Commission chimed in by criticizing the detentions, saying that many were made without warrants, and demanding that any innocents rounded up should be released. Finally, the security forces began bringing up a counterterrorism law as the justification. Iraq lacks true rule of law, and this situation brought that fact to the fore. The authorities’ ever changing rational showed that the security forces can often arrest people for whatever reason they want. In this case, it was Maliki’s desire to outdo Adeeb by fighting a straw man, the return of Baathism in Iraq.

Maliki releasing some of the prisoners, and halting Adeeb’s decision in Salahaddin showed the political nature of this crackdown. At the end of 2011, the prime minister cut a deal with Jamal al-Karbuli, the head of the Solution Movement within Iyad Allawi’s Iraqi National Movement (INM), to let 50 accused Baathists out of jail. In return, Karbuli never had his ministers follow the National Movement’s boycott of the cabinet. The next month, Maliki came to another agreement with Education Minister Mohammed Tamim of Deputy Premier Saleh al-Mutlaq’s Iraqi National Dialogue Front, which is also part of the INM. Tamim received 43 prisoners from his home province of Tamim. Then in March, 88 accused Baathists from Baghdad and 31 from Wasit were handed over to White Iraqiya. That party had consistently stood by the prime minister during his dispute with the National Movement. Finally, in early 2012, Maliki said he would not enforce Adeeb’s dismissals at Tikrit University in an attempt to appease Salahaddin’s provincial council so they would not move to make the governorate an autonomous region. The vast majority of press reports portrayed Adeeb and Maliki’s actions as sectarian attacks by Shiites upon Sunnis. The same thing occurred with Salahaddin’s autonomy drive, and the prime minister’s battle with the Iraqi National Movement. What these all missed was the fact that the Education Minister and the premier were rivals, and the former was not going to let the latter out do him in a contest over who was more anti-Baathist. Not only that, but the slow release of 212 people accused of terrorist attacks and killing thousands, and the reversal of Adeeb’s firings both showed that those were political actions rather than anything to do with the law or securing the country.

Iraq has deep political divisions. This is commonly portrayed as sectarian, but that overlooks the conflicts within parties. Education Minister Adeeb and Prime Minister Maliki have been rivals within the State of Law list for several years now, and it was the tension between them that led to the dismissal and arrest of alleged Baathists. None of their actions appeared to be legal, but was rather the result of powerful politicians manipulating their positions to increase or maintain their standings within their party and with their constituents. In the end, the prime minister came out on top as shown by his release of over 200 alleged Baathists to politicians he favored, and the reversal of Adeeb’s decision in Salahaddin. The fact that their personal rivalry led to a political crisis between the State of Law and the Iraqi National Movement, and between the central government and some provinces shows how fragile Iraq’s politics are. Maliki has been able to weather the storm, because he has more power than Adeeb, the INM is weak and divided, and he has control of the courts and security forces to hold off the provincial drives for greater autonomy. The country is still pulling itself out of this mess today as a result. Unfortunately, this will not be the last time this happens as politicians are continually vying for power, and trying to test the limits of the system to see how far they can push it to achieve their goals.

Tuesday, March 27, 2012

Despite the growing work of international energy firms, Iraq cannot seem to maintain a steady flow of oil exports. The Oil Ministry is putting high hopes on a new terminal opening in Basra to finally increase capacity, but even that is running into problems. In February 2012, the country’s foreign sales saw another dip for the second month in a row, reaching a fourteen month low.

Iraq’s oil exports took another hit in February 2012. Last month, the country exported an average of 2.016 million barrels a day. That was not only down from 2.145 million barrels seen in January, and below the yearly average for 2011, which stood at 2.16 million barrels, but the lowest mark since the beginning of last year. A barrel of Iraqi crude went for $112.92 last month, which was an increase from January’s $109.08, The country was not able to take advantage of that rise however, because of the low export figures. That meant it only earned $6.595 billion in February, the lowest amount in twelve months. In the first half of 2011, Iraq saw a steady increase in exports starting at 2.16 million barrels in January, then climbing to 2.22 million barrels in May, and then reached the yearly high mark at 2.27 million in June. After that, the amount of oil shipped overseas took a steady drop, never to return to 2.2 million again. At the same time, tensions in the Middle East kept prices up, so despite the uneven production Iraq was still able to earn a large amount of money. February broke that trend.

Iraq Oil Exports And Profits 2011-2012

Month

Avg.

Exports

(Mil/

Bar/

Day)

Avg. Price Per Barrel

Revenue (Mil)

Jan. 11

2.16

$90.78

$6.082

Feb.

2.20

$98.44

$6+

Mar.

2.15

$107.13

$7.167

Apr.

2.14

$114.26

$7.342

May

2.22

$108

$7.45

Jun.

2.27

$105.16

$7.173

Jul.

2.16

$108.80

$7.3

Aug.

2.19

$104.92

$7.124

Sep.

2.10

$104.89

$6.619

Oct.

2.08

$104.43

$6.742

Nov.

2.13

$106.59

$6.833

Dec.

2.14

$106.18

$7.061

2011

2.16

$104.96

$6.907

Jan. 12

2.10

$109.08

$7.123

Feb.

2.01

$112.92

$6.595

The cause of February’s decline could be due to a mix of three factors. First, at the beginning of the month, the flow of oil through Basra, which carries the vast majority of the country’s petroleum dropped from an average of 1.7 million barrels to just 480,000, because the weather was creating choppy seas, and preventing tankers from docking at the port there. Around the same time, the northern pipeline to Turkey was bombed, and shut down for three days. Finally, Iraq cut its exports to Jordan, which are shipped by truck from 10,000 barrels a day to 6,000. No reason was given for the decrease, but later the two countries announced that they would be raising shipments to 15,000 barrels a day between the two countries later on. Even without those troubles, Iraq constantly suffers from bottlenecks in its system, which causes exports to go up and down. All of these factors together can help explain why February saw such low numbers.

Iraq’s oil exports have always gone up and down, and February 2012 was no different. Natural, technical, and security issues were all at play, which could account for why the numbers were so low last month. There is hope for a long-term boost with the new terminal in Basra, and the other three to follow it. As with too many things in Iraq, those will probably take a long time to get up and running as is happening with the first one. In the short term, then, exports are likely to stay at around 2011’s levels, with hopes for a larger increase by the end of the year, and then heading into 2013.

Friday, March 23, 2012

Iraq is famous for its lack of services. One way Iraqis are constantly reminded of this is the piles of garbage, waste, and open sewage seen throughout the streets, rivers, and empty lots of the country. Below are a series of pictures from Baghdad that highlight this problem from the Iraqi site Baghdad by Al-Khafaj Mohammed.

Thursday, March 22, 2012

Since Iraq’s civil war ended in 2008, its economy has begun to take off. The World Bank and others have predicted that it will be one of the fastest developing nations in the next several years with double digit Gross Domestic Production (GDP) growth. That’s because the country needs so many basic forms of infrastructure, and its oil and gas industries are finally beginning to be developed after over a decade of international sanctions. Foreign investment has grown over 40% for the last two years, but there are still major problems with completing some of the larger projects that are planned by the government.

2011 saw another large increase in the amount of foreign money being invested in Iraq. There was a total of $55.67 billion in investment last year. That was up 40.3% from 2010’s $39.67 billion. 2010’s amount was a 48.7% increase from 2009. 276 companies from 45 countries did business with Iraq in 2011. The total number of contracts also grew to 294, up 80.4% from the 164 signed in 2010. It was also the reason why several experts believed that Iraq would be one of the fastest growing economies in the world over the next several years. In January 2012 for instance, the World Bank estimated that Iraq’s Gross Domestic Product (GDP) would grow 12.6% for the year, and 10.2% in 2013. The Deputy Governor of the Central Bank of Iraq predicted an average of 9.4% GDP growth from 2012-2016. The large growth rates and amount of money flowing into the country is because international sanctions have finally been removed, the Iraqi civil war ended in 2008, and the country has so many needs. This showed that despite the U.S. troop withdrawal, continued violence, and the on-going political dispute between Prime Minister Nouri al-Maliki and his opponents, business in the country is still flourishing.

Before 2008, investment in Iraq went up and down, and was at a very low level. In 2003, the first year after the fall of Saddam Hussein, only $3.87 billion was invested in the country. That almost doubled to $6.74 billion the next year, but then dropped to an anemic $1.17 billion in 2005 as the civil conflict took off. 2006 saw a large increase to $5.05 billion, before dropping to $2.70 billion in 2007. It wasn’t until 2008, that investment reached double digits to $17.93 billion. It has grown every year since then. Again, foreign money flowing into the country was directly related to the security situation within the country. With violence reduced to terrorism the amount of investment can only continue to grow.

Foreign Investment In Iraq 2003-2011

Year

Investment

2003

$3.87 bil

2004

$6.74 bil

2005

$1.17 bil

2006

$5.05 bil

2007

$2.70 bil

2008

$17.93 bil

2009

$28.70 bil

2010

$39.67 bil

2011

$55.67 bil

Another positive development was the increasingly smaller size of projects planned for the country. That might seem an oxymoron, but Iraq has faced major problems with large development plans. The smaller the project, the greater likelihood that they will be completed as planned. The average size of deals signed with Iraq went from $243 million in 2010 to $189 million in 2011. That continued the trend started in 2010 when contracts saw an even larger reduction from an average of $683 million to $260 million. Larger deals can drag on for years past their original deadlines, run into delays, and fall apart. This is due to problems with finances, logistics, bureaucracy, and the lack of trained personnel within the Iraqi government.

Investment is also being spread around the country. Before, Baghdad and Basra took the lion’s share of money. While they are still number one and two, the rest of the country is also experiencing development. In 2011, Basra received the most foreign capital, surpassing Baghdad, which was number one in 2010. Their share of total investment in the country also declined from 74.3% in 2010 to 47.0% last year. The three Kurdish provinces were third in 2011 with 14.5% of total investment, and then Ninewa, 9.4%, and Salahaddin, 6.4%. This was an important trend, because Iraq’s other provinces are in desperate need of growth with poor services, and the highest rates of poverty.

While Iraq’s economy is the most oil dependent country in the region, real estate was the largest field invested in for the second year in a row. A total of $14.524 billion was committed to housing in 2011, 26.1% of all foreign money. It’s estimated that Iraq needs to build 650,000 houses per year to meet the demand of its public, but it is no where near achieving that goal. It should be no surprise then that the largest deal last year was for $7.25 billion with South Korea’s Hanwha to construct 100,000 housing units east of Baghdad.

Foreign Investment In Iraq By Sector 2011

Sector

Value ($ mil)

% Total

Real Estate

$14,524

26.1%

Oil and Gas

$12,769

22.9%

Electricity

$11,196

20.1%

Water & Sanitation

$4,285

7.7%

Defense

$2,850

5.1%

Real Estate

$2,433

4.4%

Telecommunications

$2,063

3.7%

Industry

$1,919

3.4%

Transportation

$1,213

2.2%

Tourism

$844

1.5%

After real estate, oil and gas and electricity were the next biggest industries invested in. The second largest deal for 2011 was with Royal Dutch Shell and Mitsubishi to capture natural gas from oil fields in southern Iraq. It will include $12.8 billion in infrastructure and a $4.4 billion natural gas plant. Iraq also signed deals to build new pipelines and mooring points for Basra province, which accounts for the vast majority of the country’s oil exports. While these deals are moving ahead, and oil production is ramping up in the country, the same cannot be said for the electricity field. Last year, the Electricity Ministry signed a $1.2 billion deal with a fake Canadian company to build 10 power plants, and with a bankrupt German one for five power plants worth $650 million. Another contract with South Korea’s STX Group also ran into problems. Originally, it was supposed to build 25 mini-power plants in southern Iraq worth $2.76 billion. STX couldn’t come up with the financing however, so the deal was reconfigured to build nine regular power plants instead. Then in November 2011, the Electricity Ministry announced that it and STX had come to final terms for $1.044 billion to build power plants in three provinces. Not only that, but the Ministry’s plans to solve the country’s chronic electricity shortages are nowhere near coming to fruition. New Electricity Minister Abdul Karim Aftan said that power output would increase by the summer of 2012, and that the country’s power problems would be solved by 2014. By 2015, he claimed that the country would be producing 27,000 megawatts. An independent assessment found that this will not be possible. It predicted that Iraq would have the capacity of only 18,000 megawatts by 2015, and that none of the new power plants planned would come on line until 2013, not this summer. That means there will still be years of power outages that affects not only the public, but the economy as well. The Ministry needs to step away from such large deals, and set more achievable goals, but because the government is under such pressure to solve this problem, it doesn’t seem capable of doing that yet for political reasons.

In terms of countries investing in Iraq, South Korea surpassed Turkey as the largest source of funds. South Korea went from fourth largest investor in 2010 to number one in 2011. It committed $11.988 billion last year, 21.5% of the total. That was due to the $7.25 billion housing deal with Hanwha. Then came the U.S. with $6.878 billion. $2.3 billion of that was with Lockheed Martin for F-16 fighter jets. America was number five in 2010. Turkey was number one that year, but dropped to fifth in 2011. That’s because the majority of deals it signed last year were under $1 billion. The list of top investors shows that Iraq is attracting companies from around the world.

Foreign Investment In Iraq By Country 2011

Country

Value ($ mil)

% of total

South Korea

$11,988

21.5%

U.S.

$6,878

12.4%

England

$4,096

7.4%

Netherlands

$3,825

6.9%

Turkey

$3,694

6.6%

Germany

$3,172

5.7%

China

$3,093

5.6%

UAE

$2,959

5.3%

Italy

$2,829

5.1%

Iran

$2,184

3.9%

Iraq’s economy has grown in leaps and bounds in the last couple years. That’s largely fueled by the oil industry, which accounts for 90% of the government’s revenue, and the improvement in security. With that, Baghdad has been able to sign hundreds of deals with foreign companies to repair its infrastructure, and expand its production of petroleum and natural gas. The government is also slowly but surely weaning itself of large, unwieldy projects, many of which fail to materialize. Still, the country is years away from achieving any of its lofty goals for things such as housing and electricity. As long as oil remains at a high price, Iraq will have the funds to sign more deals to try to resolve these issues as it has to make up for a lost decade when it suffered under international sanctions, and then five years of invasion and civil war. That’s the reason why Iraq will be one of the fastest growing countries in the world for the next several years.